Hood Rubber Co. v. White

• Decision Date: 29 August 1928
• Docket Number: No. 3228,3229.,3228
• Citation: 28 F.2d 54
• Parties: HOOD RUBBER CO. v. WHITE, Collector (two cases).
• Court: U.S. District Court — District of Massachusetts

28 F.2d 54 (1928)

HOOD RUBBER CO. v. WHITE, Collector (two cases).

Nos. 3228, 3229.

District Court, D. Massachusetts.

August 29, 1928.

Harold C. Haskell, of Watertown, Mass., for plaintiff.

J. Duke Smith, Sp. Asst. U. S. Atty., of Boston, Mass., for defendant.

LOWELL, District Judge.

These were two actions to recover income and excess profits taxes for the years 1918 and 1919, paid under protest. The facts are similar, and it was agreed at the hearing that the determination of one of them would carry with it the decision of the other.

On March 14, 1919, the plaintiff filed an estimated return of profits for the year 1918 in the sum of $300,000, and paid at the same time the first quarterly installment of $75,000. The return was made out on a paper called a "Tentative Return and Request for Extension of Time." The time for filing a completed return was twice extended; the last date being July 14, 1919. In the meantime the Commissioner had demanded, and the plaintiff had paid, a second quarterly installment of $75,000. The completed return was filed on July 14, 1919. On January 26, 1924, the plaintiff and the Commissioner came to an agreement, extending the time of assessment and collection of the taxes for one year beyond the statutory period of limitation (five years in all). This instrument was as follows:

"January 26, 1924.

"Income and Profits Tax Waiver.

"In pursuance of the provisions of subdivision (d) of section 250 of the Revenue Act of 1921, Hood Rubber Company and affiliated companies, of Watertown, Mass., and the Commissioner of Internal Revenue, hereby consent to the determination, assessment, and collection of the amount of income, excess profits, or war profits, taxes due under any return made by or on behalf of the said companies for the year nineteen hundred and eighteen under the Revenue Act of 1921, or under prior income, excess profits, or war profits tax acts. * * * This waiver is in effect from the date it is signed by the taxpayer, and will remain in effect for a period of one year after the expiration of the statutory period of limitation, or the statutory period of limitation as extended by any waivers already on file with the bureau, within which assessments of taxes may be made for the year or years mentioned."

The Commissioner assessed the taxes on March 18, 1925, and collected them by distraint on December 15, 1926.

The plaintiff contends that the taxes were illegally assessed and collected, as both the assessment and collection were made after the expiration of the time allowed by the waiver.

Two questions arise:

First, was the assessment made in time? and

Second, was the tax collected in time?

The first question depends upon the meaning of the word "return," as used in the statute. The waiver, construed in connection with the statute (Comp. St. § 6371 4/5ii), allowed five years from the return in which to make the assessment. If the word "return" refers to the tentative return, the government did not assess the tax in time. If, however, it refers to the completed return, the assessment was made within the required five years. This question, which is not free from doubt, need not be decided, as, even if it be granted that the assessment was made in time, the tax was not collected within five years from the date of the completed return.

The government's contention that the waiver did not limit the time of collection of the tax to six years is unsound. The government takes...